Royal London's 445-pence-a-share offer represents a 6 per cent premium to United Assurance's closing price Monday. United Assurance had said Monday that its was in talks with Colchester, England-based mutual insurer Royal London.

News of the planned acquisition was first revealed on an Internet bulletin board on Friday, according to the Sunday Telegraph newspaper, which said that Royal London was seeking approval for its bid from United Assurance's major shareholders to ward off a possible counter-bid from Britannic PLC. Late last year, Britannic held exploratory talks with Wilmslow, England-based United, but they ended inconclusively.

The enlarged group will have over three million customers, not taking into account any overlap, total assets in excess of 16 billion pounds, and funds under management of around 20 billion pounds.

Some experts predicted last summer that United Assurance would look for a suitor because they saw it as too small to survive and is a low-income-client insurer.

Royal London didn't give estimates for cost savings from the combination but said it expects to benefit from economies of scale and synergies in a number of areas. Royal London plans to combine the administrative and head-office staffs, with the enlarged group to be based in Colchester.

Royal London wants to combine the investment-management operations at a single center in London and plans to merge the life funds of each group.Separately, United reported that in the year ended Dec. 31, operating profit before exceptional items grew by 16.5 per cent to 268.7 million pounds and underlying earnings per share rose by 20.5 per cent to 54.1 pence.

Meanwhile, CGU PLC and Norwich Union PLC confirmed plans to merge, but their stocks fell as investors realized the deal held little premium for shares.That planned merger would create the world's sixth-largest insurer, giving it enough heft to ward off European rivals looking for acquisition targets in the UK.

CGU shares fell 2.8 per cent to 774.5 pence (12.57 euros or $12.39), as the Financial Times-Stock Exchange 100 Share Index declined 1.4 per cent. Norwich Union's shares dropped even more, by 9 per cent to 396.25 pence. At those prices, the combined company would have a market value of 17.8 billion pounds - nearly one billion pounds less than when the deal was announced before trading began Monday.